Exhibit 10.23
THIRD AMENDMENT TO CREDIT AGREEMENT
THIS THIRD AMENDMENT TO CREDIT AGREEMENT ("this Amendment"), executed
as of December 31, 1998, is by and among PEGASUS MEDIA & COMMUNICATIONS, INC., a
Delaware corporation (the "Borrower"); the undersigned financial institutions,
in their capacities as "Lenders" under the Credit Agreement referred to below,
and being the "Required Lenders", as defined in the Credit Agreement, for
purposes of this Amendment (the "Required Lenders"); and BANKERS TRUST COMPANY,
as agent for the Lenders (in such capacity, together with its successors and
assigns in such capacity, the "Agent").
RECITALS
A. The Borrower, the Lenders and the Agent are parties to a Credit
Agreement dated as of December 10, 1997, as amended pursuant to a First
Amendment to Credit Agreement dated as of March 10, 1998 and a Second Amendment
to Credit Agreement dated as of August 3, 1998 (as so amended, the "Credit
Agreement"). Capitalized terms used herein without definition have the meanings
assigned to them in the Credit Agreement.
B. On November 30, 1998, the Parent issued and sold its 93/4% Senior
Notes due 2006 in the aggregate principal amount of $100,000,000, issued
pursuant to an Indenture dated as of such date between the Parent and First
Union National Bank, as trustee. In connection with the sale of the New PCC
Senior Notes, the Parent prepared and circulated an Offering Memorandum dated
November 24, 1998, setting forth information regarding the Parent, the Borrower
and its Subsidiaries and the New PCC Senior Notes.
C. Approximately $95,000,000 of the gross proceeds of the Offering has
been or, simultaneously with the execution of this Amendment, will be
contributed to the equity capital of the Borrower to retire existing
indebtedness of the Borrower to the Lenders and to finance the acquisition of a
cable system serving Aguadilla, Puerto Rico and neighboring communities (the
"Aguadilla Acquisition"), certain pending DBS Acquisitions and working capital.
D. The Borrower has requested the amendment of the Credit Agreement to
(1) permit dividends by the Borrower to the Parent to finance interest payable
under such Senior Notes, (2) revise the calculation of Adjusted Fixed Charges
under Section 5.03 of the Credit Agreement, (3) revise the Fixed Charges and
Subscriber Acquisition Cost covenants in Sections 5.03 and 5.04 of the Credit
Agreement and (4) permit the Aguadilla Acquisition.
E. Subject to certain terms and conditions, the Agent and the Required
Lenders are willing to agree to such requests, concurrently with the execution
of this Amendment.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
I. Amendments to Credit Agreement. Subject to the satisfaction of each
of the conditions set forth in Section IV below, the Agent and the Required
Lenders hereby agree with the Borrower as follows:
A. Definitions.
1. Article XI of the Credit Agreement is amended by adding
thereto, in appropriate alphabetical location, the following new
definitions:
New PCC Senior Notes. The Parent's 93/4% Senior Notes due 2006 in the
aggregate principal amount of $100,000,000, issued pursuant to the New
PCC Indenture.
New PCC Indenture. The Indenture dated as of November 30, 1998 between
the Parent and First Union National Bank, as trustee.
New Offering Memorandum. The Offering Memorandum dated November 24,
1998, and setting forth information regarding the Parent, the Borrower
and its Subsidiaries and the New PCC Senior Notes.
2. Article XI of the Credit Agreement is further amended by
deleting the second reference to "SAC Payments" from clause (m) of the
definition of "Permitted Investments" and substituting therefor the
term "SAC Commissions"
B. Fixed Charges, Subscriber Acquisition Costs; Etc.
1. Article XI of the Credit Agreement is further amended by
deleting the definitions of Adjusted Fixed Charges and Subordinated
Debt and substituting therefor the following:
Adjusted Fixed Charges. For any period of four (4) fiscal quarters, the
sum of (a) Subscriber Acquisition Costs for any such four quarter
period ending on or after March 31, 2001; (b) Total Debt Service for
such period (excluding (i) payments of principal in respect of
Permitted Seller Debt and Permitted Seller Subordinated Debt and (ii)
voluntary prepayments of the Notes); (c) Capital Expenditures made by
the Companies during such period; and (d) all other distributions and
other payments made to the Parent under Section 5.05 or otherwise
(excluding dividends and distributions made by the Borrower to the
Parent as permitted under Section 5.05(b)(vii)).
Subordinated Debt. (a) Indebtedness of the Borrower and any of its
Subsidiaries to the Subordinated Noteholders under the Subordinated
Indenture and the Subordinated Notes, (b) Permitted Seller Subordinated
Debt and (c) any Indebtedness which is subject to an Affiliate
Subordination Agreement.
2. Section 5.03 of the Credit Agreement is amended by deleting
the Table contained therein and substituting therefor the following:
Quarter End Minimum Ratio
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December 31, 1998 and March 31, 1999 1.00:1.00
June 30, 1999 through September 30, 1999 1.05:1.00
December 31, 1999 through March 31, 2000 1.15:1.00
June 30, 2000 through September 30, 2000 1.20:1.00
December 31, 2000 1.25:1.00
March 31 through December 31, 2001 1.05:1.00
March 31, 2002 and each quarter end 1.10:1.00
thereafter
3. Section 5.04 of the Credit Agreement is amended by adding
the following at the end thereof:
Not permit the Average Subscriber Acquisition Cost for any period of
four (4) consecutive fiscal quarters ended on or after December 31,
1998 through and including December 31, 2000 to exceed the following:
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Maximum Subscriber
Four Quarter Period Ended Acquisition Cost
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December 31, 1998 $550
March 31, 1999 $600
June 30, 1999 $650
September 30, 1999 $700
December 31, 1999 $750
March 31, 2000 $770
June 30, 2000 $790
September 30, 2000 $810
December 31, 2000 $825
D. Restricted Payments. Section 5.05 of the Credit Agreement is amended
by adding a new paragraph (b)(ix) at the end thereof reading in its entirety as
follows:
(ix) The Borrower may pay annual or semi-annual dividends or
distributions to the Parent solely for the purpose of financing interest due and
payable under the New PCC Senior Notes, provided that no Default shall exist as
of the date of the proposed payment or after giving effect thereto.
E. No Further Amendments. Except for such amendments, the text of the
Credit Agreement and all other Loan Documents shall remain unchanged and in full
force and effect and is hereby ratified and confirmed by the Borrower.
F. Consent to Aguadilla Acquisition. As provided in clause (a) of the
definition of "Permitted Acquisitions" set forth in the Credit Agreement, the
Required Lenders hereby approve the Aguadilla Acquisition, subject to compliance
with all of the conditions thereto set forth in such definition and in other
provisions of the Loan Documents and provided that the aggregate purchase price
paid in connection therewith shall not exceed $42,000,000, plus customary
prorations and adjustments.
II. Waiver. The Borrower has applied $65,000,000 of the Equity Proceeds
to repay principal under the Notes and has requested that it be permitted to
retain the balance of the Equity Proceeds for use as contemplated in Recital C
above. The Lenders hereby agree to such request and waive the application of
Section 1.06(d) to such portion of the Equity Proceeds. The foregoing waiver is
limited to its express terms
III. Representations, Warranties and Covenants of the Borrower. The
Borrower hereby represents and warrants to, and covenants and agrees with, the
Lenders that:
A. The execution and delivery of this Amendment have been duly
authorized by all requisite corporate action on the part of the Borrower.
B. After giving effect to this Amendment, all warranties and
representations set forth in the Credit Agreement and the other Loan Documents
are true and correct in all material respects (except to the extent they
expressly relate to an earlier specified date or are affected by transactions or
events occurring after the Closing Date and permitted or not prohibited under
the Credit Agreement).
C. As of the date hereof and since the Closing Date, no event or
circumstance has occurred which has had or could have a Material Adverse Effect.
D. After giving effect to this Amendment, no Default has occurred and
is continuing.
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E. None of the Borrower or any of its Affiliates is required to obtain
any consent, approval or authorization from, or to file any declaration or
statement with, any governmental instrumentality or other agency or any other
person or entity (including without limitation the Parent and the Subsidiaries)
in connection with or as a condition to the execution, delivery or performance
of this Amendment.
F. This Amendment constitutes the legal, valid and binding obligation
of the Borrower, enforceable against it in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
the rights and remedies of creditors generally or the application of principles
of equity, whether in any action at law or proceeding in equity, and subject to
the availability of the remedy of specific performance or of any other equitable
remedy or relief to enforce any right thereunder.
G. Without limiting the generality of the foregoing,
(a) all of the Obligations are permitted under, do not and
will not violate, and constitute "Eligible Indebtedness" under, the New
PCC Indenture, the New PCC Senior Notes and any and all other
instruments and agreements entered into or issued in connection
therewith; and
(b) the New PCC Senior Notes and the New PCC Indenture are
permitted under, and do not and will not violate, the PCC Preferred
Stock Designation, the PCC Indenture, the PCC Senior Notes and the
Subordinated Debt Documents.
IV. General Conditions. The willingness of the Agent and the Required
Lenders to agree to the foregoing is subject to the condition that the Borrower
shall have executed and delivered to the Agent (or shall have caused to be duly
executed and delivered to the Agent by the appropriate persons) the following:
A. This Amendment.
B. True and complete copies of any required stockholders' and/or
directors' consents and/or resolutions, authorizing the execution and delivery
of this Amendment, certified by the Secretary of the appropriate company.
C. True and complete copies of the New PCC Indenture and of the form of
the New PCC Senior Notes.
D. True and complete copies of the Acquisition Agreement relating to
the Aguadilla Acquisition, reflecting terms and conditions consistent with the
requirements of the Credit Agreement with respect to Permitted Acquisitions.
E. Evidence satisfactory to the Agent that at least $95,000,000 of the
gross proceeds of the Offering has been contributed to the equity capital of the
Borrower.
F. Any and all such documents, certificates and opinions (including an
opinion with respect to the Special Purpose Subsidiary and an opinion with
respect to the New PCC Senior Notes and the New PCC Senior Indenture) as the
Agent shall reasonably request with respect to this Amendment.
V. Miscellaneous.
A. As provided in the Loan Agreement, the Borrower agrees to reimburse
the Agent upon demand for all reasonable fees and disbursements of counsel to
the Agent incurred in connection with the preparation of this Amendment.
B. This Amendment shall be governed by and construed in accordance with
the laws of the State of New York.
C. This Amendment may be executed by the parties hereto in several
counterparts hereof and by the different parties hereto on separate counterparts
hereof, all of which counterparts shall together constitute one and the same
agreement. Delivery of an executed signature page of this Amendment by facsimile
transmission shall be effective as an in hand delivery of an original executed
counterpart hereof.
*The Next Page is the Signature Page*
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IN WITNESS WHEREOF, the Agent, the Borrower and the undersigned Required
Lenders have caused this Amendment to be duly executed as a sealed instrument by
their duly authorized representatives, all as of the day and year first above
written.
BORROWER:
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PEGASUS MEDIA & COMMUNICATIONS, INC.
By:_____________________________________________
Xxxxxx X. Xxxxxxxxxx, Senior Vice President
AGENT:
------
BANKERS TRUST COMPANY
By:____________________________________
Xxxxxxx X. Xxxxxxx, Vice President
LENDERS:
--------
BANKERS TRUST COMPANY
By:___________________________________
Xxxxxxx X. Xxxxxxx, Vice President
BANKBOSTON, N.A.
By:____________________________
Name:__________________________
Title:___________________________
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XXXXXX XXXXXXX
By:____________________________
Name:__________________________
Title:_________________________
BANK OF MONTREAL, CHICAGO
BRANCH
By:____________________________
Name:__________________________
Title:_________________________
FLEET NATIONAL BANK
By:_____________________________
Name:__________________________
Title:___________________________
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IBJ XXXXXXXX BANK & TRUST
COMPANY
By:_________________________________
Name:_______________________________
Title:_______________________________
MEESPIERSON CAPITAL CORP.
By:______________________________
Name:____________________________
Title:_____________________________
STATE STREET BANK AND TRUST
COMPANY
By:_________________________________
Name:_______________________________
Title:________________________________
COMPAGNIE FINANCIERE DE CIC
ET DE L'UNION EUROPEENNE
By:______________________________
Name:____________________________
Title:_____________________________
UNION BANK OF CALIFORNIA
By:______________________________
Name:____________________________
Title:_____________________________
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